U.S. stock indices fell during the session, with all three major benchmarks dropping more than 2%. As oil prices hit new highs, the Federal Reserve's potential interest rate cut options may become more limited.

On Tuesday, March 3, U.S. stocks continued their decline, with all three major indices experiencing intraday losses exceeding 2% before paring some losses by the close. At the market close, the Dow Jones Industrial Average was down 0.83%, the Nasdaq Composite fell 1.02%, and the S&P 500 declined 0.94%.

All 11 sectors of the S&P 500 ended lower. The materials sector dropped 2.69%, industrials fell 1.96%, energy declined 0.94%, telecommunications decreased 0.27%, and financials edged down 0.18%.

Brent crude futures briefly surpassed $85 per barrel on March 3, marking the first time the price reached that level since July 2024. Market analysts suggest that escalating tensions in the Middle East have driven the sharp rise in oil prices. If the price surge leads to sustained supply disruptions, U.S. inflationary pressures could re-emerge, thereby narrowing the Federal Reserve's room for interest rate cuts.

Minneapolis Fed President Neel Kashkari stated that the conflict involving Iran has increased uncertainty regarding the U.S. economic outlook, making the central bank's interest rate policy direction harder to predict. He noted that both the Fed and the market are assessing the potential duration and severity of the conflict, as different scenarios would have varying implications for monetary policy. Kashkari suggested that if U.S. inflation continues to cool, one or two rate cuts later this year might be appropriate. However, a prolonged Middle East conflict could justify maintaining the current pause on rate adjustments for a longer period.

The COMEX gold futures index fell nearly 4% during the day, while the U.S. dollar index strengthened. U.S. precious metals stocks faced pressure, with several gold mining companies leading the declines. AngloGold Ashanti dropped more than 10%, and Royal Gold fell over 8%.

The Philadelphia Semiconductor Index declined 4.58%. Among its components, Micron Technology dropped 7.99%, while Teradyne, KLA Corporation, and Coherent each fell more than 6%.

Qualcomm's CEO Cristiano Amon, speaking at the Mobile World Congress in Barcelona this week, stated that the upcoming wave of AI agents will fundamentally transform the broader digital ecosystem. Amon predicted that 2026 would be the "year of the agent," noting that services capable of performing complex, multi-step tasks or proactively assisting users will require massive amounts of data and real-time contextual information. This will increase the importance of all types of devices as data sources.

U.S.-listed Chinese internet stocks also faced pressure. Alibaba declined 4.88%, BYD Company fell 4.5%, while Baidu and Meituan each dropped more than 3%. Pinduoduo and JD.com both declined over 2%.

Meta has entered into a multi-year AI content licensing agreement with News Corp, under which it will pay the media company up to $50 million annually. According to sources familiar with the matter, the agreement is for at least three years and permits Meta to use News Corp's content from the United States and the United Kingdom. The deal enables Meta to retrieve the latest information for its AI product users and utilize other content, such as news archives, for model training. The scale of the agreement reflects the growing value tech companies place on news content, which helps train their AI models and provides material for tools like chatbots to deliver real-time information to users.

The "Magnificent Seven" U.S. tech stocks showed mixed performance. Microsoft, Meta Platforms, and Amazon closed up 1.35%, 0.23%, and 0.16%, respectively, while Tesla fell more than 2% and NVIDIA declined over 1%.